The Companies Spending Hundreds Of Millions On NYC Office Space
Major tenants signed big leases in New York City in 2024, in some cases paying handsomely for their new spaces as the city's office market attempts to claw its way back from dark pandemic times.
Those tenants include TPG, which over the course of its lease will pay Tishman Speyer more than $1B for its 300K SF in The Spiral, according to a CompStak analysis of the highest-valued Manhattan office leases provided exclusively to Bisnow.
Following TPG in lease value is Bloomberg’s renewal at 731 Lexington Ave. and Willkie Farr & Gallagher’s renewal and expansion at 787 Seventh Ave. Bloomberg’s nearly 1M SF will cost $880M, while the law firm is expected to pay more than $822M for about 315K SF.
Last year, leasing in Manhattan fell just under the 25-year prepandemic annual average of 35.5M SF, with 30.2M SF of deals inked, according to a JLL report. That is a 20% increase from 2023.
And a considerable number of those leases were pricey, especially as companies transition to higher-quality offices to attract employees back to their desks. Leases totaling just under 10M SF — or a third of all leasing activity — were for $100 or more per SF.
Of those, 28 transactions started at $200-plus rents, comprising 591K SF, according to JLL.
The top 10 leases in CompStak’s analysis have starting rents ranging from the low $70s and $80s, such as for Bloomberg’s other lease at 919 Third Ave., to the low $180s, like for TPG at The Spiral and Citadel at 660 Fifth Ave.
In 2023, 5.6M SF of leases surpassed $100 per SF — about half of the volume signed at that price in 2024, according to JLL. But that doesn’t mean tenants didn’t promise large sums to office landlords.
Law firms Davis Polk & Wardwell LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP will each pay more than $1.4B in rent over the course of their leases at 450 Lexington Ave. and 1345 Sixth Ave., respectively, according to CompStak. The latter was the largest lease in the country in 2023, totaling 765K SF.
In 2024, tenants in the finance, insurance and real estate industries signed four of the top 10 deals, while legal services made up another three. The sectors have consecutively accounted for at least half of CompStak’s highest-valued transactions since 2019.
Six out of 10 deals were renewals or extensions. In four, tenants were expanding from their existing space.
All of the offices on CompStak’s list are in Midtown, with three of the leases on Park Avenue. The submarket has become one of the most popular in the city and beyond for financial tenants, with landlords running out of space for tenants to move into.
But that can be difficult for tenants looking to take over large chunks of towers. The average transaction size across the top 10 deals topped 525K SF, an increase of 24% from the 2023 average, according to CompStak.
Still, just two of the most valuable leases took place in new construction or a significantly redeveloped building. Those were TPG in The Spiral and Citadel in 660 Fifth Ave.
The number of leases in new buildings is likely to remain depressed as New York City's office development pipeline has dried up. Just under 5M SF of office space is under construction across the city, and 60% of that supply is preleased, according to JLL's fourth-quarter office report.
